Archive for Secrets to improving an I.T. Services Practice

Secrets to Improving an I.T. Services Practice Part 5

Last time we discussed the tools and technologies of the four business models in our continuing discussion:
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  1. Resellers/System Builders
  2. Break-Fix Services Providers
  3. Professional Services Providers
  4. Managed Services Providers

Now let’s discuss pricing and positioning of each of these service delivery models.

Pricing and Positioning

Resellers/System Builders

Because of the competitive challenges faced by resellers/system builders, pricing for their services tends to be very aggressive, as it is difficult to build a unique value proposition for a commodity service which compels a prospect to choose one provider over another – hence the proclivity for many resellers/system builders to compete on price.
 
Positioning a hardware warranty services agreement as the answer to alleviating a prospect’s pain points concerning hardware failure and its negative impact on efficiency, productivity and net profits may not be a persuasive enough message in the SMB space to secure enough business to meet the reseller/system builder's revenue requirements. This is the reason that many service providers offer hardware warranty services in addition to break-fix, professional and managed services for equipment they have built, installed or manage after the sale.

Break-Fix Services Providers

Break-fix services providers share competitive challenges similar to those faced by resellers/system builders, and pricing for their time and materials-based services tends to be aggressive, as it is remains difficult to build a unique value proposition for a commodity service which can be sourced from a multitude of vendors. In this service delivery model, the provider may price their services in the following manner:
  • Per hour
  • Per hour based upon response time
  • Per hour based upon service required
  • Per hour based upon number of resources
  • Per hour based upon skill set of resources
  • Per hour based upon time of day
  • Per hour based upon day of week or holiday
…or any combination thereof. In addition, the break-fix services provider may allow customers to receive reduced labor rates by offering the ability to purchase blocks of hours in advance. This is commonly referred to as “block time”.

Positioning break-fix services as a necessity for prospects and customers whose businesses are reliant on technology is not a tremendously difficult task, and achieved more easily by a break-fix services provider than by a pure reseller/system builder – especially when targeting the SMB space. This being said, it is generally not difficult for the break-fix services provider to secure enough business to meet their revenue requirements. 

Additional project revenue can be had by the provider that delivers professional services to their customers in addition to break-fix services, and these services are normally quoted on a per-project basis.

Professional Services Providers

Unless the professional services provider delivers highly specialized services, their service delivery model is not immune to competitive challenges. Depending upon their ability to demonstrate to their customers a unique value proposition which differentiates them in their market, their pricing can range from very reasonable to very expensive, based on this uniqueness and what their markets will bear.

Experienced professional services providers with a solid change management process will normally price their deliverables as a firm quote containing very specific detail regarding the work scope to be delivered, and will do an excellent job of setting and re-setting customer expectations throughout the project lifecycle. This not only guarantees profitability, but increases customer satisfaction as well.

Positioning professional services solutions as the answers to meeting prospects’ and customers’ needs in areas such as increasing efficiency, productivity, alleviating business pain and mitigating risk is not normally a difficult goal to achieve, and becomes easier the more vertical-specific or specialized these solutions are.

Managed Services Providers

Sold in SMB, as well as Mid and Enterprise environments, flat-fee managed services may be priced in any number of ways, including but not limited to:
  1. Monitoring Only
  2. Per Device
  3. Per User
  4. Tiered
  5. All You Can Eat
In the Monitoring Only scenario, several different service levels can be employed; from an SMB-focused offering which provides operating system and software application patch management, antivirus and anti-spam updates, disk optimization and backup monitoring for a flat fee per month, allowing the managed services provider to bill for additional remediation activities identified through monitoring, to a Mid/Enterprise offering which forwards all alerts to the customer’s in-house IT staff only, allowing them to address and perform all incident resolution, to a scenario where the provider participates in basic incident resolution or even more advanced support.

The Per Device pricing model is fairly simple, and many managed services providers utilize it primarily for its simplicity. The premise is to develop a flat fee for each type of device that is supported in a customer environment. For instance, a basic per device pricing model might designate a flat fee of $79 per desktop, $399 per server, $39 per network printer and $99 per network managed.

The benefits of this pricing model include the fact that it is very easy to quote and illustrate costs for prospects, as well as the facility it affords the provider to modify the monthly service fee as the customer adds additional devices in the future. 

The Per User pricing model is similar to the Per Device pricing model, with the difference being that the flat fee is billed per end-user per month, and covers support for all devices used by each end-user. This may entail supporting an office pc, laptop, PDA or Smartphone, home pc and connectivity and communication from hotels and kiosks for the user while they are traveling or away from the office.

The Tiered pricing model may be the most popular among managed services providers. The premise for this pricing model is to create several bundled packages of services, with each increasingly more expensive package providing more services to the customer.

For instance, a “Bronze” desktop managed services package may include basic phone and remote support, patch management and virus and adware removal for an entry-level price. Bumping up to the higher-priced “Silver” desktop managed services package may include onsite visits, and the “Gold” package may include emergency after-hours support, being the highest-priced package. 

The All You Can Eat pricing model is extremely flexible, and includes all remote support, onsite support and lab or bench time for an entire organization for a flat fee per month, and may provide 24x7x365 support, or services during specific hours and/or days of the month only, with additional charges billed for services rendered outside of those times. The primary goal is to provide the customer the ability to realistically budget their IT support costs over a year’s time, and experience no extraordinary billing fluctuations.

For technology-strategic and -dependent prospects and customers, positioning flat-fee managed services as the answer to increasing efficiency, productivity and mitigating business pain and risk while reducing overall I.T. costs is not a difficult task to accomplish.

Next time: staffing requirements for the 4 business models.

Erick Simpson
MSP University
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Secrets to Improving an I.T. Services Practice Part 4

Last time we discussed the deliverables of the four business models in our continuing discussion:

  1. Service Delivery Part 4 Resellers/System Builders 
  2. Break-Fix Services Providers 
  3. Professional Services Providers 
  4. Managed Services Providers

Now let’s discuss the tools and technologies of each of these service delivery models.

Tools and technology

In order to provide the best services possible for customers, and continually improve their internal efficiencies and capabilities in order to scale, all service providers should consistently evaluate new tools and technologies and budget for investments in these yearly. These investments should be business decisions based upon a clear ROI or benefit to the provider and/or their customers.

Resellers/System Builders

An effective reseller/system builder will be able to document, inventory and manage warranted assets in customer environments and execute a consistent problem management process, insuring service delivery remains within agreed-upon SLA’s. Software tools utilized by the provider to accomplish these activities will include asset management, problem management and remote access/control and remediation solutions. Some remote monitoring and management (RMM) and professional service automation (PSA) solutions provide all of these capabilities.

The reseller/system builder's PSA solution may provide the following capabilities:

  • Customer relationship management (CRM) capabilities
  • Service request or trouble ticketing capabilities
  • Scheduling & dispatching capabilities
  • Time & expense tracking capabilities
  • Inventory control capabilities
  • Asset management capabilities
  • Configuration & change management capabilities
  • Knowledgebase capabilities
  • Resource management capabilities
  • Integration of quoting & invoicing with accounting systems capabilities
  • Sales funnel capabilities
  • Robust, customizable reporting capabilities

Dependent upon the specific hardware and associated components the reseller/system builder warrants, there may be additional software imaging,test, update and remediation tools required or beneficial in order to provide diagnostic, troubleshooting and repair services for their customers. Leveraging these types of software tools help the reseller/system builder gain efficiency and speeds problem identification and resolution, increasing customer satisfaction.

In addition to software tools, the reseller/system builder will require both standard, as well as specialized hardware tools in order to service warranted equipment.

Break-Fix Service Providers

An effective break-fix services provider will be able to manage the I.T. infrastructure in their customer environments and execute a consistent problem management process.

Software tools utilized by the break-fix services provider to accomplish these activities may include asset management, problem management and remote access/control and remediation solutions. Some remote monitoring and management (RMM) and professional service automation (PSA) solutions provide all of these capabilities.

The break-fix services provider’s PSA solution may provide them the following capabilities:

  • Customer relationship management (CRM) capabilities
  • Service request or trouble ticketing capabilities
  • Scheduling & dispatching capabilities
  • Time & expense tracking capabilities
  • Inventory control capabilities
  • Asset management capabilities
  • Configuration & change management capabilities
  • Knowledge base capabilities
  • Resource management capabilities
  • Integration of quoting & invoicing with accounting systems capabilities
  • Sales funnel capabilities
  • Robust, customizable reporting capabilities

Like the reseller/system builder, the break-fix services provider may also utilize additional software test, update and remediation tools to provide diagnostic, troubleshooting and repair services for their customers. Leveraging these types of software tools help the break-fix services provider gain efficiency and speeds problem identification and resolution, increasing customer satisfaction, which is required in this commodity-based service delivery model.

In addition to software tools, the break-fix services provider will require both standard, as well as specialized hardware tools in order to service equipment in their customer environments.

Professional Services Providers

An effective professional services provider will be able to implement solutions in their customer environments and execute a consistent project planning and management process.

Software tools utilized by the professional services provider to accomplish these activities may include project planning, project management, technical drawing, quoting and pricing tools. Some professional service automation (PSA) solutions provide many of these capabilities.

These software tools may grant the professional services provider the following capabilities:

  • Customer relationship management (CRM) capabilities
  • Project scoping capabilities
  • Technical drawing capabilities
  • Project quoting capabilities
  • Project planning capabilities
  • Equipment and parts ordering capabilities
  • Project management capabilities
  • Integration of quoting & invoicing with accounting systems capabilities
  • Sales funnel capabilities
  • Robust, customizable reporting capabilities 

The professional services provider may also utilize additional software imaging, updating and data and account migration tools during service delivery. Leveraging these types of software tools help the professional services provider gain efficiency and speed implementation to bring solutions in on time and within budget, increasing customer satisfaction.

  • Customer relationship management (CRM) capabilities
  • Project scoping capabilities
  • Technical drawing capabilities
  • Project quoting capabilities
  • Project planning capabilities
  • Equipment and parts ordering capabilities
  • Project management capabilities
  • Integration of quoting & invoicing with accounting systems capabilities
  • Sales funnel capabilities
  • Robust, customizable reporting capabilities

In addition to software tools, the professional services provider will require both standard, as well as specialized hardware tools in order to implement solutions in their customer environments.

The Managed Services Provider

In order to provide a well-rounded approach to proactive service delivery, the managed services provider must be equipped to monitor and service customer equipment, services and networks, and document the results of their actions. In addition, their profitability increases the more they are able to provide these services remotely.

An effective managed services provider will be able to manage, update and maintain hardware, software and services in customer environments and execute a consistent problem management process, insuring service delivery remains within agreed-upon SLA’s.

Software tools utilized by the provider to accomplish these activities will include asset management, problem management and remote access/control and remediation solutions.

A professional services automation (PSA) solution may provide them the following capabilities:

  • Customer relationship management (CRM) capabilities
  • Service request or trouble ticketing capabilities
  • Scheduling & dispatching capabilities
  • Time & expense tracking capabilities
  • Inventory control capabilities
  • Asset management capabilities
  • Configuration & change management capabilities
  • Knowledge base capabilities
  • Resource management capabilities
  • Integration of quoting & invoicing with accounting systems
  • capabilities
  • Sales funnel capabilities
  • Robust, customizable reporting capabilities

The ability for the managed services provider to proactively monitor critical devices and services is a fundamental necessity to maintain and increase customer uptime. Many remote monitoring and management (RMM) solutions allow the capability to receive information from customer environments such as:

  • Hardware asset, role and inventory information
  • Operating system, application software and licensing and patch level information
  • Device IP address information
  • Physical system information (memory, disk, NIC, etc.)
  • Running processes
  • Up/down device status

These RMM solutions allow the configuration of pre-set thresholds for critical devices and services to alert on operation outside of recommended parameters, allowing the provider to take action to maximize customer uptime and maintain SLA’s. 

A remote monitoring and management (RMM) solution may grant the managed services provider the following capabilities:

  • WMI/Syslog/SNMP monitoring capabilities
  • Multiple alerting capabilities – email/text page/pager
  • Configurable and customizable alerting capabilities
  • Supports escalation
  • Outputs detailed logging
  • Supports multiple operating systems
  • Supports critical server monitoring functions – Exchange, SQL, IIS, SharePoint, Linux, Novell
  • Supports multiple types of hardware – PCs, Macs, servers, routers, switches, firewalls, Printers
  • Supports Multiple 3rd-Party Software Monitoring
  • Supports operating system and software patch management and updates
  • Easily Integrates with PSA solutions
  • Supports remote control of monitored devices
  • Script, schedule and automatically execute otherwise costly, labor-intensive activities
  • Robust, customizable reporting capabilities

In addition to these tools, the managed services provider may invest in and utilize additional software test, update and remediation tools in order to provide diagnostic, troubleshooting and repair services for their customers. Leveraging these types of tools helps the managed services provider gain efficiency and speeds problem identification and resolution, increasing customer satisfaction. In addition to software tools, the managed services provider will require both standard, as well as specialized hardware tools in order to deliver maintenance services to their customers.

Next time: pricing and positioning used in the 4 business models.

Erick Simpson
MSP University
Subscribe to my blog here 
Join MSP University FREE for all things
Managed Services

Posted in: Secrets to improving an I.T. Services Practice

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